Whole Life Vs Term Life Insurance
After making the decision to buy life insurance, one then has to narrow down which type of life insurance is the most suitable. There are benefits and consequences to whole life vs. term life insurance. The differences between the two types are in the options, payments and the length of the policies.
Term Life Insurance
Term life insurance has the fewest options, shortest terms and smallest premiums. It can be purchased in increments of years (5, 10, 20 …) and will remain in effect as long as the premiums are paid. There are two payment options available with term life. You can choose a fixed rate premium for the life of the policy or get a policy for which the premiums increase every year.
The benefits involved with term life are simple: If the bearer dies during the allotted term of years for which insurance has been purchased, the beneficiaries are paid the total amount of the policy as long as the premiums have been paid.
With term insurance, premiums will go up as the bearer ages and most insurance companies will not sell term life to those over the age of 65 years. Some term life policies require a periodic health check to determine an increase in rates while others do not require a doctor visit.
There are term life policies that allow for a conversion to permanent whole life insurance at any time the purchaser chooses.
Whole Life Insurance
Whole life insurance has more options and higher premiums but is considered to be permanent life insurance. The bearer is covered for as long as he or she lives.
Options involved with whole life insurance include the options to invest premium monies for dividend profits in order to build up the cash value for death benefits, lower the monthly premiums or receive cash back, the option to sell the policy at any given time when money is needed and the chance to receive some of the money paid in when and if the purchasers cancels the policy.
Options and plans associated with whole life insurance factor in on the amount of benefits and dividends earned over and above the amount paid for the policy.
When making the decision between whole life and term life insurance, it is wise to read all of the small print and compare the policies to find the one that is most suitable for your needs and income.
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